Oil and gas leasing in the National Petroleum Reserve-Alaska

WHAT IS THE NATIONAL PETROLEUM RESERVE-ALASKA?
In 1923, the Administration of President Warren Harding set aside 37,000 square miles of public land on the North Slope of Alaska for the purpose of oil and gas production. Originally known as the Naval Petroleum Reserve-Alaska, in 1976 Congress transferred jurisdiction to the U.S. Department of the Interior to develop the area in a "manner consistent with the total energy needs of the Nation." In 1980, Congress again directed the department to conduct a program of competitive leasing in the NPR-A.

In the early 1980s, BLM completed an Environmental Impact Statement and conducted a series of lease sales in the NPR-A, which led to the drilling of one well by private industry. All previous leaseholds have since expired.

While to date there have been no commercial discoveries in the NPR-A, previous exploration within the reserve confirms the area’s hydrocarbon potential. Now, a combination of more sensitive seismic mapping capabilities, along with lower costs and improved drilling and production methods make development in the NPR-A both commercially feasible and desirable. In fact, the commercially viable Alpine oilfield was discovered in 1994 just outside the eastern edge of the Reserve and the first oil production from the field is expected in the year 2000.

Therefore, consistent with Congressional intent to develop oil and gas in the NPR-A, in 1997, BLM issued a Draft Environmental Impact Statement (DEIS) to determine whether the NPR-A should be reopened to leasing. The DEIS focuses exclusively on a 4.6-million acre planning area in the northeast corner of the 23.7-million acre reserve. The five options put forward for discussion range from leasing the entire planning area to no leasing at all, with a number of suggestions on how the environmental impact of oil and gas development can be mitigated. Alternative E, which allows leasing throughout the planning area with environmental safeguards, is the option favored by the oil and gas industry.

NEW OILFIELD TECHNOLOGY AND OPERATIONAL PROCEDURES MINIMIZE IMPACT OF DRILLING
Over the past several decades the oil and gas industry has developed new, sophisticated operational technologies, and when these are combined with appropriate environmental stipulations, oil and natural gas can be extracted from any part of the NPR-A planning area without any harm to either local fish and wildlife populations or to the traditional uses of the land.

Over the last 20 years technical developments have eliminated any significant impact on tundra environments from oil and gas exploration. Exploration is now done in the winter, using ice roads and drill pads. Muds and cuttings are backhauled or injected back into the ground, preventing injury to the tundra. Fish and wildlife are rarely disturbed, since they are mostly absent in the winter when exploration is taking place. And once exploration is successful, new techniques enable development to proceed with only a minimal "footprint" on the ground and little impact on the surrounding environment.

Over the past decades of oil exploration and development on the North Slope, government agencies and the oil industry have conducted a series of joint long-term monitoring studies of the environment. These studies have generated extensive, detailed information on the effects of oil and gas production on the behavior of arctic fish and wildlife and on their habitats. These studies have enabled federal, state and local governments and industry to anticipate the effect that oil and gas operations might have on wildlife and fish and to design operational requirements and restrictions to eliminate detrimental impacts.

In fact, Alternative E, which would authorize leasing throughout the Planning Area, contains more than 80 operational stipulations, such as providing no-entry buffer zones around high-use goose lakes and limiting construction and helicopter activity. The DEIS stipulations give a more than adequate margin of safety to geese and other important species. Alternative E also ensures no interruption of traditional uses of the land for hunting and fishing.

LIMITING THE AREA TO BE LEASED REDUCES THE CHANCES OF COMMERCIAL DISCOVERIES
Some have suggested that reducing the area to be leased could provide additional protection to wildlife and the environment. However, this alternative would sharply diminish the likelihood of significant oil and gas production.

In addition to Alternative E (100 percent leasing), the BLM’s draft offers three lesser leasing plans; Alternatives B through D would provide for 50 percent, 75 percent and 90 percent leasing in the planning area, respectively. But these percentages can be misconstrued. Since only 4.6 million acres of the 23.7-million acre NPR-A are in the planning area under discussion, the 100-percent option would lease only 19 percent of the reserve. Likewise, the other alternatives would lease about 9.5 percent, 13 percent, or 17 percent of the entire NPR-A land mass.

And Alternatives B through D would limit the industry’s access to the most promising prospects in the area. The oil and gas industry’s extensive exploration activities over the last 10 years have shown that hydrocarbon deposits generally occur within 20 miles to the south of a geographic feature known as the Barrow Arch, which generally follows the Beaufort Sea coastline. All of the producing fields in the North Slope, and all of the pending field developments, are located within 20 miles of the coast.

Because of this geography, moving from Alternative E--100 percent leasing of the planning area--to Alternative D--90 percent leasing--would allow access to only about one-half of the land in which the industry has the most realistic chance of finding oil. Alternative A--continuing current activities without allowing any oil and gas lease sales--would of course prevent any meaningful development of oil and gas resources. Therefore, the entire planning area--Alternative E--should be made available for exploration.

LEASING NOW WOULD BENEFIT U.S. ENERGY SECURITY
Oil remains a key component of the U.S. energy mix--providing 40 percent of the nation’s energy supply and 97 percent of U.S. transportation fuel. Although U.S. oil consumption is now nearing the record levels of the late 1970s, domestic supply is shrinking, with U.S. oil production at its lowest level in more than 40 years.

According to the U.S. Department of Energy, domestic oil reserves have declined 30 percent since Prudhoe Bay began production in 1977, requiring the United States to import more oil to meet the economy’s needs. Although production on the frontier areas of Alaska’s North Slope could take almost a decade, allowing careful and environmentally sensitive exploration and production would help meet U.S. energy security goals.

SUMMARY
Dramatic advances in drilling technology and operational knowledge about protecting Arctic wildlife and ecology would make it possible for the oil and gas industry to explore the National Petroleum Reserve-Alaska with a minimal environmental impact. Exploration activities would fulfill Congressional intent for this area, and strengthen U.S. energy security. The Bureau of Land Management should implement Alternative E and proceed to fully lease the northeastern NPR-A planning area.

March 1998

Courtesty of the American Petroleum Institute